TaxTMI 
TaxTMI 
2025 (3) TMI 452
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.... the Act r.w.r 8D of the IT rules without considering the factual scenario. 2.0 That on the facts and in the circumstances of the case, the CIT-(A) ought to have considered Rs. 3,51,14,183/- reward under MEIS Scheme as capital receipt in the computation of total income under the normal provisions of the Act as well as in computing the book profit u/s 115JB of the Act. 3.0 That on the facts and in the circumstances of the case, the Ld. CIT(A) is unjustified in confirming the excessive interest under section 234B & 234C of the Act charged by the Ld. AO. 4.0 That the appellant craves leave, to add, to amend, modify, rescind, supplement, or alter any of the grounds stated here-in-above, either before or at the time of hearing of this appeal." 3. Brief facts of the case are that, the Assessee filed return of income of Rs. 11,92,17,950/-, later on revised the same on 30/03/2019 declaring the very same income. The case of the Assessee was selected for scrutiny under CASS as well as covered under the manual Selection also. The assessment order came to be passed on 15/12/2019 by making addition u/s 14A of the Income Tax Act, 1961 ('Act' for short), of Rs. 40,39....
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.... MEIS Scheme as capital receipt in the computation of the total income under the normal provision of the Act as well as in computing the book profit u/s 115JB of the Act. The Ld. Counsel vehemently submitted that the export incentives under MEIS are incentives granted in the form of Reward as per FTP Policy 2015 to 2020. The said Reward is granted to eligible exports under the FTP Policy. The Ld. Counsel submitted that there is a difference between the term 'Assistance' and 'Reward' and by referring to dictionary of law lexicon, submitted that the word 'assistant' has been defined as the "act of assisting; help; aid; succour; support, the action of assisting, the help afforded; aid; relief'. However, the term reward is usually applied to a sum paid for the performance of some specific act to some person or persons. A reward is a 'recompense' or a 'premium' offered by services to be performed.' The Ld. Counsel further submitted that script is not an 'Assistance' which being a 'Reward' received by the Assessee for export under the scheme of Government of India for the efforts undertaken to enhance the exports. The Ld. Counsel further submitted that the objective of the Government bei....
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....laim was not made in the return of income or the revised return of income, by relying on the Judgment of the Hon'ble Supreme Court in the case of Goetze India Ltd. (supra) the Ld. CIT(A) held that the claim of the Assessee is not admissible. 11. Now the question arose for consideration as to whether can Assessee make additional claim by way of additional ground which was not made in the return of income or not?. The Hon'ble Bombay High Court in the case of Commissioner of Income Tax, Central-1, Mumbai Vs. Pruthvi Brokers and Shareholders reported in [2012] 23 Taxman.com 23(Bom) vide Judgment dated 21/06/2012, after considering the plethora of Judgments on the said issue including the Judgment of the in the case of Goetze India Ltd. (supra), held that the Assessee is entitled to raise additional Grounds before the appellate authorities by making additional claims which were not made in the return filed by the Assessee. The relevant portions of the Judgment are as under:- "10. A long line of authorities establish clearly that an assessee is entitled to raise additional grounds not merely in terms of legal submissions, but also additional claims to wit claims not made ....
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.... thereof he may set aside the assessment and direct the Income Tax Officer to make a fresh assessment. The Appellate Assistant Commissioner has, therefore, plenary powers in disposing of an appeal. The scope of his power is co-terminus with that of the Income-tax ITXA3908 Officer. He can do what the Income-tax Officer can do and also direct him to do what he has failed to do." (emphasis supplied) 6. The above observations are squarely applicable to the interpretation of Section 251(1)(a) of the Act. The declaration of law is clear that the power of the Appellate Assistant Commissioner is co- terminus with that of the Income Tax Officer, if that be so, there appears to be no reason as to why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the Income Tax Officer. No exception could be taken to this view as the Act does not place any restriction or limitation on the exercise of appellate power. Even otherwise an Appellate Authority while hearing appeal against the order of a subordinate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions o....
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....epends upon the facts and circumstances of each case and no rigid principles or any hard and fast rule can be laid down for this purpose." [emphasis supplied] 13. The underlined observations in the above passage do not curtail the ambit of the jurisdiction of the appellate authorities stipulated earlier. They do not restrict the new/additional grounds that may be taken by the assessee before the the appellate authorities to those that were not available when the return was filed or even when the assessment order was made. The sentence read as a whole entitles an assessee to raise new grounds/make additional claims :- "if the ground so raised could not have been raised at that particular stage when the return was filed or when the assessment order was made...." "or" if "the ground became available on account of change of circumstances or law" The appellate authorities, therefore, have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with additional grounds which ITXA3908 were available when the return was filed. The first part viz. "if the ground so raised co....
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....e, where the ground though available when the return was filed or the assessment order was made, was not taken or raised for reasons which the appellate authorities may consider valid. In other words, the jurisdiction of the appellate authorities to consider a fresh or new ground or claim is not restricted to cases where such a ground did not exist when the return was filed and the assessment order was made. 16(A). A Full Bench of this Court in Ahmedabad Electricity Limited v. Commissioner of Income-tax, (1993) 199 ITR 351 considered a similar situation. In that case, the appellant/assessee did not claim a deduction in respect of the amounts it was required to transfer to contingencies reserve and dividend and tariff reserve either before the Income Tax Officer or before the Appellate Assistant Commissioner in appeal. Subsequently, this Court had, in Amalgamated Electricity Company Limited v. Commissioner of Income-tax, (1974) 97 ITR 334, held that such amounts represented allowable deductions on revenue account. The appellant, therefore, raised a new claim and additional grounds before the Tribunal in that ITXA3908 connection. The Tribunal rejected the same. The ....
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....round in its return itself. It did not have to await a decision of a court in that regard. Indeed, even if a judgment is against an assessee, it is always open to the assessee to claim the deduction and carry the matter higher. The words "could not have been raised", therefore, cannot be read strictly. Neither the Supreme Court nor the Full Bench of this Court meant them to be read strictly. They include cases where the assessee did not raise the claim for a reason found to be reasonable or valid by the ITXA3908 appellate authorities in the facts and circumstances of a case. 17. The next judgment to which our attention was invited by Mr. Mistri is the judgment of a Bench of three learned Judges of the Supreme Court in National Thermal Power Company Limited v. Commissioner of Income-tax, (1997) 7 SCC 489 = (1998) 229 ITR 383. In that case, the assessee had deposited its funds not immediately required by it on short term deposits with banks. The interest received on such deposits was offered by the assessee itself for tax and the assessment was completed on that basis. Even before the Commissioner of Income-tax (Appeals), the inclusion of this amount was ne....
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....eal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, we do not see any reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of that item. We do not see any reason to restrict the power of the Tribunal under Section 254 only to decide the grounds which arise from the order of the Commissioner of Income Tax (Appeals). Both the assessee as well as the Department have a right to file an appea1/cross-objections before the Tribunal. We fail to see why the Tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier." 18. In the case before us, the CIT(A) and the Tribunal have held the omission to claim the deduction of Rs. 40,00,000/- to be inadvertent. Both the appellate authorities held, after considering all the facts, that the assessee had inadvertently claimed a deduction of Rs. 20,00,000/- paid after the end of the year in question. We see no reason to interfere with this finding. We see less reason to interfere with the exer....
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....ught ITXA3908 to claim a deduction by way of a letter before the Assessing Officer. The claim, therefore, was not before the appellate authorities. The deduction was disallowed by the Assessing Officer on the ground that there was no provision under the Act to make an amendment in the return of income by modifying an application at the assessment stage without revising the return. The Commissioner of Income-tax (Appeals) allowed the assessee's appeal. The Tribunal, however, allowed the department's appeal. In the Supreme Court, the assessee relied upon the judgment in National Thermal Power Company Limited contending that it was open to the assessee to raise the points of law even before the Tribunal. The Supreme Court held :- "4. The decision in question is that the power of the Tribunal under section 254 of the Income-tax Act, 1961, is to entertain for the first time a point of law provided the fact on the basis of which the issue of law can be raised before the Tribunal. The decision does not in any way relate to the power of the Assessing Officer to entertain a claim for deduction otherwise than by filing a revised return. In the circumstances of the c....
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.... in the case of Assistant Commissioner of Income tax Vs. Eastman Exports Global Clothing Pvt. Ltd. (supra) wherein, the Co-ordinate Bench of the Tribunal considering the very same argument of the Department, held that the benefit derived by way of sale MEIS scripts in the open market in the name of 'Award' is not an 'income' within the meaning of provision under Section 2(24) (xviii) of the Act of the Act in following manners:- "27. Now, let us examine the Chapter 3 - with reference to 3.00 & 3.01(i) r.w. provisions under section 2(24) (xviii) of the Act. We already held that the objective of the scheme is to provide rewards to exporters falling under MEIS of Foreign Trade Policy - 2015 framed by the Government of India to exporters for level playing field. In view of the same, let us examine the arguments of the Id. DR as to whether the provisions under section 2(24)(xviii) of the Act are attracted to the facts of the present case or not, for better understanding, the provisions under section 2(24)(xvi) of the Act inserted by the Finance Act, 2015, w.e.f. 01.04.2016 is reproduced herein below for ready reference: (xviii) assistance in the form of a subsi....
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....projects that ultimately contribute to societal development. The grantee is expected to use the funds from the grant for the stud purposes. Cash incentive" means any incentive received in cash and as its name indicates, a cash incentive has a clear monetary value being granted to motivate employees/company(s) to achieve the target company's overall revenue, etc. The term "reimbursement" means any expenditure which has been incurred by the assessee is being given back to the assessee. Since the expenditure would have been met in cash, the reimbursement of the same would also be in cash. As per Central Board of Indirect Taxes and Customs, "duty drawback" is a trusted and time-tested scheme administered by CBIC to promote exports. It rebates the incidence of Customs and Central Excise duties, chargeable on imported and excisable material respectively when used as inputs for goods to be exported. This WTO compliant scheme ensures that exports are zero-rated and do not carry the burden of the specific taxes. So duty drawback can either be in cash or in kind granted by the Board. "Waiver" or "Concession" falls under the category of discount on any amounts payable or paid. Therefore, ....
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....is applicable when particular words pertaining to a class, category or genus are followed by general words. In such a case the general words are construed as limited to things of the same kind as those specified.........." 31. On careful reading of the above judgements along with written note of the Id. AR, we note that the meaning of an unclear or ambiguous word or phrase can be determined by the words surrounding it and the words surrounding the words "by whatever name called" are the words subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement. Therefore, in our opinion, that the words "by whatever name called" only qualifies the words "subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement" and not the word "assistance". As canvassed by the Id. AR, we note that the principle of ejusdem generis focuses on interpreting a general term in a list based on specific accompanying terms, taking support from the decision of Hon'ble Supreme Court in the case of Shankar Prasad (supra), Bharat Petroleum Corporation Ltd. (supra) and Grasim Industries Ltd. (supra), in our opinion, the words "by whatever n....
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....name called by the Central Government. He argued that this ICDS is applicable for computation of income chargeable under the head "Profits and gains of business or profession" or "income from other sources". In case of any conflict between the provisions of the Income Tax Act and the ICDS, the provisions of the Act shall prevail to the extent. We find this ICDS deals with the treatment of Government grants. The Government grants are sometimes called by other names such as subsidies, cash incentives, duty drawbacks, waiver, concessions, reimbursements, etc. We find the treatment of Government grants at page 12 & 13 of the paper book, which is reproduced herein below for better understanding: Treatment of Government Grants 5. Where the Government grant relates to a depreciable fixed assets or assets of a person, the grant shall be deducted from the actual cost of the asset or assets concerned or from the written down value of block of assets to which concerned asset or assets belonged to. 6. Where the Government grant relates to a non-depreciable asset or assets of a person requiring fulfilment of certain obligations, the grant shall be recognised ....
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....ty, employment potential and thereby enhancing India's export competitiveness. 35. The above point 3.03 clearly shows the objective of Merchandise Exports from India Scheme (MEIS) is to offset infrastructural inefficiencies and associated costs involved in export of goods/products, which are produced/manufactured in India, especially those having high export intensity, employment potential and thereby enhancing India's export competitiveness. 36. In reply, the Id. CIT-DR Shri Palanikumar contended the benefit of MEIS under Foreign Trade Policy-2015 are received on a year to year basis, is a revenue receipt, but not a capital receipt. We note that merely because a receipt is received on a year to year basis, is a revenue receipt is not acceptable for the reason that this Tribunal for AYs 2011-12 to 2016-17 i.e., five assessment years held the receipt of sale of scrips under MLFPS based on Foreign Trade Policy-2015 is a capital receipt, we find no contrary view brought on record by the appellant-revenue, therefore, we find force in the arguments of the Id. AR that the reward under the Foreign Trade Policy- 2015 by way of MEIS scrips is given as a percentage ....
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....on behalf of the Department (appellant) submitted that the additional revenue generated by higher free sale sugar quota cannot be considered to be a capital receipt in the hands of the assessee (respondent herein) as held by the High Court. He further contended that similarly retention of the collective excise duty on the sale price of free sale sugar in excess of the normal quota and paying to the Government only the excise duty payable on the price of levy sugar resulted in revenue generation in the hands of the assessee which contention of the Department has been erroneously rejected by the High Court. According to the learned counsel, under the Scheme, there were two distinct concepts, namely, the concept of accrual of income in the hands of the assessee and the concept of application of additional funds generated thereunder. According to the learned counsel, application of additional funds is neither material nor relevant for deciding the character of the incentive subsidy. In this connection, learned counsel placed reliance on the judgment of this Court in the case of Sahney Steel and Press Works Ltd. and olrs Vs. CIT reported in [1997] 94 Taxman 368/228 ITR 253 (S.C....
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....nses, interest on borrowings, depreciation on Plant and Machinery, but it should also be able to declare a reasonable dividend on the equity capital. According to the Committee, the factory should be able to generate sufficient funds to repay the instalments of the term loans. Under Para 21.0 the said Committee stated that five possible incentives for making a sugar plant economically viable unit could be provided for, namely, capital subsidy, allowing a larger percentage of free sale sugar, high levy sugar price, allowing rebate on excise duty and remission of purchase tax. In this case, we are concerned with allowability of a larger percentage of free sale sugar and rebate on excise duty. Following the said Report of the Sampat Committee, the above Schemes came to be formulated We have examined in this case the 1980 and 1987 Schemes. Essentially all the four schemes are similar except in the matter of details. Four factors exist in the said Schemes, which are as follows: (1) Benefit of the incentive subsidy was available only to new units and to substantially expanded units, not to supplement the trade receipts. (ii) The minimum investment specified was Rs. 4 cr....
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....hat case was dismissed by the Tribunal and, therefore, the assessee had come to this Court by way of a special leave petition. It was held by this Court on the facts of that case and on the basis of the analyses of the Scheme therein that the subsidy given was on revenue account because it was given by way of assistance in carrying on of trade or business. On the facts of that case, it was held that the subsidy given was to meet recurring expenses. It was not for acquiring the capital asset. It was not to meet part of the cost. It was not granted for production of or bringing into existence any new asset. The subsidies in that case were granted year after year only after setting up of the new industry and only after commencement of production and, therefore, such a subsidy could only be treated as assistance given for the purpose of carrying on the business of the assessee. Consequently, the contentions raised on behalf of the assessee on the facts of that case stood rejected and it was held that the subsidy received by Sahney Steel could not be regarded as anything but a revenue receipt. Accordingly the matter was decided against the assessee. The importance of the judgment of thi....
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....as held by the Hon'ble Supreme Court in the case of Ponni Sugars & Chemicals Ltd. & ors. (supra) to the facts of the present case, we note that the reward by way of MEIS scrips is given to offset infrastructure inefficiencies, but, not for the purpose of running the business more profitably. It is noted further that though the said amounts are brought into profit and loss account claimed as exempt in the return of income, we find the said treatment in the books of accounts by itself cannot be determinative of taxability, we, therefore, hold that the same treatment of amounts received by way of sale of MEIS scrips as credited to the profit and loss account cannot alter the receipt, in our opinion, does not fall in the definition of income even after insertion of sub-clause (xviii) to section 2(24) of the Act. Thus, it is a capital receipt, notchargeable to tax. Therefore, the contention of the Id. DR relying upon the decision in the case of Sahney Steels & Works Ltd (supr) is not acceptable. 39. In the case of Gravita Metal Inc (supra) for AY 2016-17 dated 15.06.2023, the Amritsar Bench of ITAT held as under: 16. The Ld. AR argued that 'exemption' and &....
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....o interpretations, the benefit of interpretation is given to the subject and there is nothing unjust in a taxpayer escaping if the letter of the law fails to catch him on account of the legislature's failure to express itself clearly'. This principal of law is quoted referred by Hon'ble Supreme Court in case of "Checkmate Services Pvt. Ltd. v. CIT", [2022] 143 taxmann.com 178/290 Taxman 19/448 ITR 518 (SC)vide Para 50 of its judgement Respectfully, applying the above settled principal of law, to the interpretation of the Notification No.56/2002 dtd. 14.11.2002 as amended by Notification No.19/2008 dt. 27.03.2008, the assessee is granted exemption from payment of excise duty to the balance part of 36% of total excise duty collected. Since, the word 'exemption' in not included in the of ambit the Section 2(24)(xviii) of the Act, though it specifically includes the words subsidy, grant, cash incentive, duty drawback, waiver, concession & reimbursement. and hence, in the absence of inclusion of word 'exemption' under the said clause, we are of the considered view that the scope of this section cannot be enlarged to include exemption by interpreting that it i....
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.... General of Foreign Trade wherein incentive @ 2% on the FOB value of the total export was allowed. As per the Scheme, the incentive was given to export products in a specified market. The export of products which are covered under FPS list would be given incentive of 2% on FOB value of the export. In other words, it is an incentive given by the Government for exploring the new markets across the globe. The question arises for consideration is when the assessee was given incentive for exploring the new markets across the globe, whether such incentive would be a capital receipt or revenue receipt? The Apex Court in the case of Ponni Sugars & Chemicals Ltd. (supra) had an occasion to examine an Identical situation and observed that if the object of the subsidy was to enable the assessee to carry on the business more profitably, then the receipt is on the revenue account. On the other hand, if the object of assistance was to enable the assessee to set up a new unit or expand the existing unit, then the receipt is on the capital account. In the case before us, the Government of India provided the incentive for exploring the new markets across the globe. Exploring a new market for a spec....
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.... as it deals with Government grants only, but not inclusive of the duty credit scrips under MEIS, which are rewards. We hold that the benefit under Foreign Trade Policy-2015 received being MEIS scrips cannot fall within the meaning of cash assistance under section 28(iiib) of the Act. We hold the sums received as a sale of MEIS scrips credited to the profit and loss account, the said treatment in the books of accounts by itself cannot be determinative of taxability of said receipt. Thus, the benefit derived by way of sale MEIS scrips in the open market is not an income with the meaning of provisions under section 2(24)(xviii) of the Act. Therefore, we find no infirmity in the order of the Id. CIT(A) for the reasons recorded therein and also for discussion made by us in the aforementioned paragraphs, the grounds raised by the Revenue fails and are dismissed." 14. In the present case also the export incentives under MEIS are incentives granted in the form of Reward as per FPT Policy 2015 to 2020 to the eligible exports under FTP Policy, which being not an 'assistance' received by the Assessee for export under the scheme of Government, but the same is a 'Reward' for efforts underta....